Self Employed Mortgage: How To Get Approved
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- Опубликовано: 20 мар 2020
- If you're self-employed, there's no need to fear getting a mortgage! We'll walk through the steps you need to take and the 2 types of loans that will help you qualify for a mortgage.
🎧 Listen To The Podcast
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0:37 Why is self-employment income different?
0:59 What lenders want to see
1:50 Where self-employed buyers get in trouble
3:22 2 types of loans
4:23 Impact of tax write-offs
4:53 Net vs gross income
5:12 Documents needed
6:26 Interest rate on traditional loans
7:31 2 main types of portfolio loans
9:32 Down payment requirement for portfolio loans
9:54 Credit score on portfolio loans
10:09 Rates for portfolio loans
11:01 How to prep tax documents with your lender
12:29 Adding a co-signer to help out
13:40 Refinancing out of a portfolio loan
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Hey, my name is Kyle and I'm a Loan Advisor serving Tennessee, Florida, and Ohio. I help you get a crystal-clear home loan so you can win the house you love.
www.winthehouseyoulove.com/
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NMLS# 1701021
Motto Mortgage Alliance
www.winthehouseyoulove.com/
8900 N. Dixie Dr.
Dayton, OH 45414
Equal Housing Opportunity
Timestamps!
0:37 Why is self-employment income different?
0:59 What lenders want to see
1:50 Where self-employed buyers get in trouble
3:22 2 types of loans
4:23 Impact of tax write-offs
4:53 Net vs gross income
5:12 Documents needed
6:26 Interest rate on traditional loans
7:31 2 main types of portfolio loans
9:32 Down payment requirement for portfolio loans
9:54 Credit score on portfolio loans
10:09 Rates for portfolio loans
11:01 How to prep tax documents with your lender
12:29 Adding a co-signer to help out
13:40 Refinancing out of a portfolio loan
🎧 Listen To The Podcast
plinkhq.com/i/1493715474
💰 7 Proven Ways To Save Thousands On Your Home
www.winthehouseyoulove.com/free
your voice and accent sounds great to me.
He's such a great speaker. Organized and very informative.
Thanks so much! Glad to help!
Omg yes! It’s stressful learning all this yet his tone and how he speaks just calms me lol
That’s what made me subscribe after just watching 1-2 videos, incredible channel
This has been the most helpful video I've found about buying a home as a business owner!
Awesome, thanks so much!
You have NO idea how helpful this was!! Seriously, thank you so much for this!🙏🏻
You're so welcome!
Thanks for this video. Im self employed owned my business for 5 years now. I had this problem waiting another 10 months then Im making the plunge. Thanks for this video much needed. Im subscribed thanks!
I have looked online for a year on how Home Mortgages work for Self Employed. But I could not find anything clear until I found your awesome video. Thank You.
Glad it was helpful! Thanks for watching. :)
Thank you for the information. Concise, clear and to the point.
Glad it was helpful!
This was VERY informative. Thank you so much for sharing this valuable information 🙏🏾
Glad you enjoyed it!
I appreciate that you got right to the topic and aren't long winded
Appreciate it. Thanks for watching!
Kyle thank you for this in-depth explanation of self employed loan programs. You covered absolutely everything I needed to know. I just subscribed because your content is very insightful and thorough.
You're very welcome! I'm glad it was helpful, thanks for watching!
Awesome video I’m self employed & make a lot of money but I write off everything / thank you this is my Christmas present on Christmas Day
Happy holidays!
I set myself up as an S-Corp, with a W-2, they did ask for the W-2, and I was able to provide it along with 2 years personal & Business or Corp Tax statement or Tax Return. I’m a veteran so i used a VA loan.
Thanks for sharing!
Good guy!
Supporting you to have more video informative. 👍
More to come!
This was incredible advice! Thank you so much!
You're so welcome!
Really good stuff. I have a much better understanding of these processes now. I am a beginner that truly values this video. Thanks
Great to hear! Best of luck!
Thank you ,you answer every question I had great video
Glad it was helpful!
Great info to apply for a mortgage as a self employed individual
Thanks! I'm glad it was helpful!
Thanks for the information, very helpful.
Glad it was helpful!
so many financing options, even for self-employed people like myself, thanks!
For sure! Thanks for watching!
How have I missed this one? I just went independent in an area I’ve worked in consistently for approx 7rs. Just got tired of the middle guy. I heard in another video of yours stating if you had a recent change like this it would be taken into consideration that the field had not changed just the company… now hearing 15% down is a new challenge to say the least. I have the credit I have the pay I don’t have the savings and it’s just me. I wanted to be hunting lenders in two years not just barely putting a drop in the bucket. Maybe in my state of shock I’ve missed the good news. I’ll rewatch. Thank you! Better to know now than in two years.
Wow! You can also check my recent uploads, thanks for watching!
Best Explanation so far. Thanks
Hey there, piyber4! Thanks a ton for the kind words. I really appreciate your support! If you're ready to take the next step and start on a pre-qualification, you can head over to www.winthehouseyoulove.com/lender or shoot me an email at kyle@winthehouseyoulove.com. I'm here to help, so feel free to reach out anytime. Cheers!
Very informative! Thank you
Glad it was helpful!
thank you so much! this video made me less stressful!
Glad it helped!
Nice video! Educational and visual!
Thanks! I’m glad you enjoyed!
Thank you for this video Sir. You answered alot of the questions i had. Going on my 4th year in buisness and have had trouble getting a home loan due to poor tax advice. Keep up the great content 👏
Dude thank you so much! Such a nice speaker, cant thank you enough. You nailed what i wanted to hear at the end. Thinking about using a non occupant signer while i get my tax returns and net worth corrected. Do you have any videos talking about this last thing? Thanks!
Thanks! I don't currently
His voice is so soothing
Awesome stuff, thank you!
Glad you liked it!
Good stuff! This video answered a lot of the questions I've been asking myself as I prepare to buy a home. Thank you sir.
Glad it was helpful!
Thanks for this video.
You're welcome!
Excellent Video, Explained It Simply ✨👌🏽
Glad it was helpful!
So Happy I found your channel. I am learning so much.
Awesome! Thank you!
I found this older video but you tell it. Thanks.
Thanks for watching!
I don't understand why your video dosen't have at least 1 millions views
Thanks for the information 👌
You're welcome, thanks for watching!
Kyle Seagraves → winthehouseyoulove.com
Great information bro thanks
No problem 👍
Thank very informative
Thanks Nicole! I'm glad you found the video informative. Please let me know if you have any other questions about the home buying process.
If you have any questions please email me at kyle@winthehouseyoulove.com
Thanks so much!
You're welcome!
biggest mistake I made was actually opening the corporation under my name..........they ran in circle for 6 months then denied my loan even tho I paid myself with W2 payroll. what I could have done was either have my parents open a corporation that pays me or even sell my company to them. then i am just like another employee in a company.
That’s tough, sorry you’ve had a difficult time! If you’d like, I can connect you with a loan officer I trust if you go to my website and click Apply. Best of luck to you! winthehouseyoulove.com
Thank you so much for this great video! Where can I buy the tablet you’re using?
You're welcome, thanks for watching!
It's just an iPad :)
Thank you!
You're welcome!
Very helpful video,i made the mistake of writing everything off legally but it drastically droppwd my earnings on paper whic now i regret bc on paper it shows i barely made anything but this video has helped alot.income isnt an issue at all, the only issue is that on paper it looks like i dont make or barely make anything due to write offs. This year ill be not putting most offs to make it look i made a profit to get approved,even if i have to pay alot in taxes but i want a house
Great video and thank you for your insight. Who do your clients use as co-signers? I don't have parents.
Question, but back story first. I recently started a small business this year and my business income is very stable. I converted my LLC into an S Corp and I plan to pay myself a salary that will be the same each month. I am actively looking for a home and I want to use my w2 wage along with my 2nd job to qualify for a mortgage. My main question is, do I have to disclose ownership of my business to the lender? What if I simply treat my self employment as any other job?
The NET income is the part that gets me every time. I check all the other boxes, but write off a lot of expenses for the business, which in truth doesn't have that high of a profit margin. So my NET income according to my tax returns is pretty low, which prevents me from getting a mortgage. Can't seem to find a way around it... maybe private money is my only hope?
If the business isn't bringing in enough money to pay the mortgage, it might be worth exploring a lower payment amount
Hi Kyle. I really love how you explain, it really gets straight into my new LO’s braincells😅 but yeah seriously, thank you so much. Would you mind making a video on how to determine the qualifying income for self employed borrowers? How to read tax returns, schedules and which ones to include please. I will really appreciate it.
Great job. What software set up do you use to share half the screen?
Thanks!
First, I screen record my iPad and use a drawing app called Adobe Fresco.
Then, I record the video while drawing any notes on the iPad.
Next, I import both the screen recording and video into Final Cut Pro. I overlay the screen recording on top of the video and sync them up so you can see me draw and talk at the same time.
- Kyle Seagraves winthehouseyoulove.com
Thank you 🙏🏽🙏🏽🙏🏽❤️
Any time! :)
Thank you for the explanation! My husband had a career change that works for a company that gives out 1099 forms so at the moment this seems like our only option. How long after purchasing can you refinance?
If he went from W2 to 1099, he will need to wait a minimum of 2 years on 1099 income
Great videos - do you happen to have one on Construction to Permanent Loans?
Not yet
Very informative. I'm a new Realtor in Florida and your videos have helped me a lot.
Thanks for watching!
A lender I spoke with was unbelievably unhelpful! Didn't mention one thing on hee that you discussed.
Thanks for watching!
Is that an iPad ? I’m thinking of creating videos like this.
Btw great video! Helped me understand it way better than before
Yes it is :)
Hey, so I’m a physical therapist for 3 going on 4 years. I opened a C Corp in 2019 for my contracted 1099 work and officially went into business for myself completely in the same field in 2021.I currently work a full time job on top of my business in order to satisfy fha loan requirements. Could I just pay myself a W2, wait to file taxes in 2022, and use a personal income tax return from 2021 to satisfy the requirements?
Hey Kyle, very useful video like the other ones you create.
2 Quick question
i moved to Maryland on GC in Aug last yr. I got my job this month and it pays 100k and I have good credit. My wife has been working for last 2 yrs makes 25k and excellent credit.
2. Will we quality for a conventional loan or should we wait for 2 yrs?
2. Also I have a self employed job in Canada which is still running and pays me around 100k CAD, will this income be considered?
If you haven’t been self employed for 2years to the date, will having a co-signer on the loan help with approval rates?
I learned alot from this video thank you.
Last year i made 80k in gross income
After deductions it drop down to 40k
This year ive made 120k so far. Im guessing after deductions, ny taxable income will be 70k
Im waiting to do my taxes to apply for a loan.
thanks
Thank you so much for watching!! :)
When you say write offs, are you talking tax write offs ? I have an Airbnb business where I use rental arbitrage method meaning I rent and then sublet units. My income is 120000, but after expenses/rent I’m at about 50,000. I don’t think I put my expenses on my taxes…which amount will banks use to process loan approval?
Does renting for a year and paying rent on time help you qualify for a bank statement loan?
Thanks for this video. Wondering two things: what mic do you use? What program do you use for split screen ?
A bit overkill, but a use a Neumann TLM 102
First, I screen record my iPad and use a drawing app called Adobe Fresco.
Then, I record the video while drawing any notes on the iPad.
Next, I import both the screen recording and video into Final Cut Pro. I overlay the screen recording on top of the video and sync them up so you can see me draw and talk at the same time.
Win The House You Love awesome thank you!
Forgot to ask, what camera do you use? Thank you!
Fuji XT20
Kyle thanks so much for your helpful videos! This one was very helpful to me too as a business owner. I was wondering if you know the answer to my question. I am a single member LLC taxed as an S-Corp, which means that I am on payroll and receive a base salary each month that is consistent and this is where most of my taxes are taken out. The rest of my income comes from distributions which I take out from my business bank account about once per month. Do you know if they will count my distributions as income also for mortgage purposes? If my accountant accounted for this on my personal joint married tax return for adjusted gross income, do you think the bank would go with our total adjusted gross income? Thank you!
You're very welcome!
Yep! The lender will count your salary AND your distributions in your income :)
A safe bet is your total adjusted gross income averaged over the past 2 years.
@@WinTheHouseYouLove Thank you! That is very helpful to know!
What if your LLC is an S Corp and you pay yourself as an employee receiving a W2? Can you approve?
I already provided my 2 years 1099 tax return to lender and signed purchase agreement but my home is still building will I have to provided new tax return before closing
great vid. 2 questions. will putting more down, say 20-50% down, make it easier and or drop the intrest rate? Self employed sole proprietor , hvac business, and moving out of state to start business in the new state going to be an issue? Thanks
It will most likely help you be able to get lower rates.
Moving to a new state as self-employed can be tricky. Here's a bit of what the underwriter will need to consider when looking at your income:
Is the company expanding to the new area/state?
WIll they 'shutdown' their current business in current area/state?
Do they have a 'storefront' or are they established out of their home?
What licensing requirements does the new state/area have that may impede their ability to start a new business?
Do they have employees and if so, will they need to start over with new employees in new area/state?
If employees are needed based on size of company, will hiring a new crew be difficult in the new area/state?
How long does the borrower believe it will take to generate a consistent level of income/revenue if they are shutting down the old business?
Is the new area/state already saturated with HVAC businesses where it would be difficult to come in and 'break' into this new market?
Is the new area/state have a full series of seasons? Or is it more of a fair weather state?
Will expenses be different for starting up a new business, especially if they have a 'storefront' vs working out of their home?
@@WinTheHouseYouLove thank you for responding. I have done my homework as far as clientele and climate. It will be more lucrative. I have no employees. I plan on advertising 2 months before “coming soon”... the best I can show or prove will be the data that I have researched. Thanks again
My husband is self employed- sole proprietor. We’re planning on converting to an s Corp. we’ve already filed papers but have yet to operate under the new business name and transfer our contractors license to it. If we switch from sole proprietor to a Corp under a new name do we have to wait 2 years under new name?
This is the guidance I got from our underwriter:
"Difficult to give a timeline here Kyle. This timeline would vary from loan to loan and there would be not set timeframe and would depend on the individual case file you are working on. The timeline may be different for a dog groomer, for example vs a consultant or dentist and the following items should be considered (see below):
Most of it will hinge on how long they were sole proprietor, plus, when did the switch take place (over a year ago, last month, etc). How has the revenue changed from moving to a s-corp; how has the expenses changed from moving to an s-corp; how are they paying themselves (is it a salary and is it in line with the draws they took as a sole proprietor).
Bottom line: 'how long they will have to wait' is dependent upon many things as I noted above and there is no static answer and each loan must be weighed on its own merits based on these and other questions that the lender may need to understand to build a case for using the s-corp income before the next filed tax year."
I have an LLC but would like to file as an S Corp. How do lenders view income if I do this? I was told by my last tax lady that the bank would not consider any of the income as my own if I opted to file as an S Corp. Is this true?
Hello, I received both 1099 and W2 at the end of the year, which goes by %50/50 of my income would I have a loan with that.
Does W2s count for self employed for mortgage ?
I have a single-member LLC and I operate a fleet with high daily miles. After mileage deductions and repairs, my taxable net income is very low. So let's say I don't take any deductions to raise my net income and pay the taxes for 2 years. Wouldn't it trigger a flag for IRS for all the deductions I took in my previous years?
Hi! As long as those deductions are legal, I don't think IRS will flag you for that. Best of luck!
Hi, Thanks for reply.. does monthly house rent also count as a debt for self employed person?
Yes it does. Thanks for watching!
Hi Kyle. I own an S Corp and I am on the payroll as an employee. I receive a W2 at the end of they year. Would the W2 be treated as my official income even though I am self employed?
Yep!
Do you have any recommendations of creative minded loan officers liscensed in Missouri? Thank you!
Not currently unfortunately!
Hey does unemployment income count as reg income? Also do any banks nowadays do no-doc Loans? Much appreciated
Unemployment doesn't count since it's not likely to continue for 3+ years.
Some will bank statement only loans to determine income. Or DSCR loans for investment properties.
Please explain 1099 mortgage loan, and how to get approved! Thank you!!!
I'll add it to the list!
🤗
If approved for a Portfolio- Bank Statement Loan, what are the requirements and chances to refinance to a better loan
You'll need to refinance when your tax returns show enough income to qualify on a conventional loan
I just started an ind. contractor position in January. I don't yet have an accountant but planning on getting one. I was also considering opening a sole proprietorship and paying myself but it sounds like i can skip all that and just find a bank statement loan. What do I need to know about shopping for this kind of loan? Thanks Kyle!
Bank statement loans are a good "bridge" while you organize your taxes moving forward. It's not super different than shopping a normal loan, just might be harder to find lenders with those options
Win The House You Love do you have any suggestions? I am looking into new American funding.
Hello, I'm a small business owner. I was going to amend my 2019 taxes to reduce deductions and file for my 2020 taxes with also less deductions to qualify for a mortgage loan here in 2020. The plan was to pay the taxes owed for both. Is this acceptable or should I just wait for 2021 to file again(for maximized approval)?
*When it comes to tax advise, understand you need to consult a CPA
Personally, I'd wait to file 2021. A lender will see the amendment to 2019 and figure you just amended to try to qualify for more and nix the loan
This is a weird question but- I been self employed for a while (1 year and a half) but I also have accepted internships (one for 3 months in 2019, 3 months in 2020 and 3 months right after as a contractor (most likely would get a 1099 from that internship) that will end up giving me a W-2. Even though I been doing my self employed job as well, does this somehow over-rides my time as self employed ?
I don't imagine an underwriter would accept internship income because by its nature it's not likely to continue.
The contractor/self-employment income will need to be received consistently over a 24 month period to use fully.
My husband and I accepted an offer from a self employed buyer and it has been a nightmare! The underwriter keeps asking for more time but we have been in escrow for 3 months. We are currently in the process of getting out of escrow and start arbitration.
The lender should be the underwriter
Im a self employed first time home buyer Which loan program would be best for me if i only want to use 1 year of tax returns because the past years i had too many deductions but for next year taxes im not gonna claim a lot of deductions. Thanks for your help.
The 1099 program is probably your best option.
I wonder if there's a way of qualifying how much you gain in loan approval amount versus how much tax you pay by writing less things off. Like for every $1000 I pay in taxes I can be approved for an additional $10,000. I guess that's a good question for my CPA. Thank you for making these videos.
Sure, but on the other hand if you are qualifying for a loan with 5% down, every $1K you do write off translates to $20K in borrowing power.
I have been receiving 1099 since 2011 yes my income fluctuates but im consistently receiving income but the lender is still taking their time to approve my loan. My score is 800 . It pretty sad. It been over 3 months with no decision
Ah bummer! I'd switch lenders. No need to stay if they won't contact you in 3 months. Feel free to reach out here for a referral: www.winthehouseyoulove.com/referral
Hi can I get loan from b lenders for home buy if I m new self employed ?
Currently trying to buy a home.
Wife and I are both self employed. Because we filed for unemployment and currently aren’t getting jobs we have been told no mortgage loans will be approved to anyone who is unemployed, even if just for the crisis. Do you know if bank statements loans would do this too and who can I got to for those? I will def be refinancing inside of a year.
Thanks for the question, Dylan!
You're correct about employment. If you file for unemployment, a lender can't approve a loan no matter the program until you're employed again.
For bank statement loans, you'd want to talk with a mortgage broker, but all the bank statement programs I know of have been put on pause because of COVID-19
Win The House You Love thank you for the quick reply. We are considering purchasing it as a real estate investment. With an asset depletion loan? We don’t need to officially move into it for 6 months. Trying to come up with a way to get something in the next 6 weeks.
@@YoureSoCool1 hi Dylan im in your same situation, can you explain the real estate investment purchase? are you able to live in your investment purchase ? I would appreciate any info
sorry i have another question, so ive been trading stocks since 2016 but on and off because i had a full time job, but due to this covid, i was furloughed, so now i am trading full time and i'm having so much success, i feel like a 2k mortgage is very doable. I am planning to get a house or condo sometime next year. leaning toward FHA but im going to put about 15K down payment. How should i go about this plan? thank you so much.
I'm glad it's going well for you!
Most likely, the lender will take your earnings and average them over the past 2 years to find a qualifying income if that's your sole source of income.
What if one's spouse has a W2 with the having self-employed Income, does the self-employed still need 2 years income?
Yes
New subscriber! Do you have recommendations of banks that will do portfolio loans?
I'm glad you're here! Angel Oak is an option :)
Win The House You Love Thank you so much for the recommendation.
Win The House You Love There’s quite a few Angel Oak LOL. Which one is it? Angel Oak mortgage solution or angel oak loans, etc?
@@tinaf600 Angel Oak Mortgage Solutions. I’ve closed loans with them and they were great to work with.
@@magicdudegary thank you!
Hi. If I am interested in a property that is 280k but I am only approved for 250k Can I show that I have the difference in cash including 20k for down payment and be approved? I sold my home recently and it left me with a great down payment but I'm really nervous about my ability to get a loan based on high write offs. ...I def want a home more than what a 200k loan will qualify me for
Also, I've been in business 3 years with a steady increase of income.
Hi, I know that I am a year late... But with those who collected in the pandemic because are single parents how they calculate half of the year work? Thanks in advance for the help.
They'll look at averages over the period of time worked
This is great video____which do you think is better ?____ higher income with more existing debt or lower income with zero debt? I believe debt to income ratio will be the same for a borrower with $40000 income with $ 20000 outstanding debt and a $20000 income with zero debt, which one is viewed more positively by a lender? Many thanks for your help in advance!
The amount of income doesn't really matter to lenders, but the DTI does.
A $40,000/yr income with $500/mo in debt payments has a 15% DTI before the projected housing payment. And 36% after an estimate $700/mo housing payment.
That same scenario with $0/mo in debt and an estimated $700/mo housing payment with a $20,000/yr income is a ratio of 42%.
So, the 36% DTI would look better than the 42% DTI.
Hi, how do we know if they need 2 years taxes or one year taxes? If is only one year it will be better because you won't owed the IRS so much money for 2 years.
You will not be able to get a loan if you owe taxes. You will either need to pay them or get on a payment plan with the IRS.
My situation is so weird. I want to get a home mortgage loan. I have been self employed for over 3 yrs now. However in those 2 yrs review. I spend 1 yr in PA and 1 yr in NY. I was told because im asking for a loan in PA that they would need both yrs to be self employment in PA. This is what a broker told me.So Im not sure how to approach this problem.
Hmm, if your business and personal income has remained consistent, this should not be an issue. I do not see in the guidelines anything about if the self-employed borrower relocates and needing to wait an additional 2 years.
I'd try talking to another lender :)
Kyle Seagraves → winthehouseyoulove.com
Very helpful for a guy that is just getting his feet wet. Thank you.
Thank you so much for watching!! :)
Hi, what’s the debt to income ratio for a self employed person?
Employed or not, DTI should range at least 36%-42%. Thanks for watching!
Hi Kyle, I would like to talk to you about getting a mortgage, all the contact links and schedule a call are not working.
You can shoot me an email → kyleseagraves@hey.com
Which lenders do you recommend
You can text #apply to 937-358-6542 and I can connect you with a Loan Officer
So what is the name of that last program to qualify as a self employed please ?
Bank statement program
I know you mentioned 2 years of self employment being a requirement but do you know if any concessions are made if....I have been in the same industry for 5 years, worked for the business owner and opened up my own business 18 months ago?
If you have been in the field prior, then 1 year of self-employment works :)
@@WinTheHouseYouLove Thank you!
Would this work for someone who has less than 2 years of self employment income?
It's very difficult to get approved with less than 2 years self-employment income